While dealing with the loss of a loved one can be a challenging and emotional time for the family, it can become more worrisome if you discover you’ve inherited real estate and don’t know what to do with it. Inheriting a property with no mortgage attached to it can be a financial boon if you already know what you want to do with it and what options you have, but if you dont know what should you do when you Inherited a house with no mortgage then don’t worry; we’re here to help!
We’ll be covering some ideas and options for you as a new homeowner to deal with your inherited property, and cover a number of important considerations you should make as soon as you inherit the real estate with no mortgage.
Important evaluations on your inherited home with no mortgage
Once you receive your inherited home, there are a few evaluations you should perform on the property before going any further. Despite the inherited home coming with no mortgage, there are still important considerations to be made regarding the value of the house, the cost of any repairs necessary and the possibility of multiple heirs of the property.
Value the real estate
In order to have a value of the real estate, you may consider first having it appraised by an official appraiser who can give you an unbiased and professional opinion of the property. This qualified appraiser will create a report on the value of your home, based on a visual inspection, comparing recent sales of similar properties, aspects of the home and current market trends. You’ll need to pay a fee for an appraiser which can differ across different people, but it can usually be up to several hundred dollars. Don’t let this cost dissuade you however, because even if you don’t plan on living in the property, an appraiser is vital in showing you the value of your property in regards to selling and property tax.
Repairs and Utilities
It’s vital to check the property for any repairs necessary before the property can be listed for sale, rent, or even moved into. You may not be aware of any dangers in the property that can cause trouble later down the line, but you also need to get repairs sorted if you intend to list the property for sale. Repairing a home for sale can be tricky so it’s advisable that you get a home inspector first to see if there are any big-ticket repairs that need doing, such as the roof or windows. Home inspections can vary depending on the size of the home, but according to Zillow they can cost between $250 and $700.
If you are repairing with the intention to rent however, large repairs may help potential tenants become interested in the property though these repairs can be performed during their tenancy as well so there’s less need to do all repairs at once. You can save money by performing repairs as needed and instead provide creature comforts for your tenants, such as new carpet and fresh paint.
There’s a chance that you may end up sharing this property with multiple heirs but there are solutions to overcome this issue as well if you desire the property for yourself. If other heirs want the property for themselves as well, you may have to sit down with them to overcome differences in opinion and hash out an agreement.
It’s best to find out what they want for the property as soon as possible so you can work out your options. If you want to keep the property and they want to sell, it can simply be a matter of buying them out, however, if they also want to keep the house then you’ll need to come to an agreement on how to share the house between them.
Options for an Inherited Property with no Mortgage.
When you inherit a property without a mortgage attached to it, you’re open to a lot more options than simply selling it to pay off debts. As you own the property outright, you can begin thinking about the opportunities for yourself, either by selling the house, renting it, moving in yourself, or simply selling quickly if you don’t have the time to invest in making the house suitable for the retail market.
Rent it out
You can always rent out your home to receive some added income. It can be nice to have cash flow in from tenants simply for letting someone live on property you already own. However, being a landlord does come with work, so you need to be prepared for what’s expected of you.
You will have to maintain the property, meaning you’ll be the one forking out for repairs, and you’ll need to find out if there are any zoning restrictions in the area regarding where the property is located, as these will prevent it from being used as a rental property.
In addition, you should ideally do a rent assessment for the area to determine how much you should charge. After that it’s all about trying to find a tenant who will respect the property and pay on time to leave you with little concerns.
Sell it on the open market
Selling the home on the open market with no mortgage fees to pay off would lead to a tidy profit, even with the commission fees of real estate agents. If you’re selling it on the open market, you’ll need to fix up the place a little just to get it ready for sale, as it can really help lue potential buyers to your property.
This can often lead to a much higher selling price if you go down this route, though you will have to account for the costs of hiring experts and supervisors if you can’t perform the repairs yourself. You can also sell the property by yourself (known as For Sale By Owner) but it can be helpful to have the experience and expertise of a real estate agent who knows the area well.
Of course, you can always move into the property once all the official documentation has been finalized. Perhaps this new home is larger than your current house, offers better amenities, or the area’s utility costs are simply lower. Either way, it can feel great to own your own property.
You’ll still need to inspect the house carefully as you’ll want to nip any hidden problems in the bud before they become bigger issues in the long run. When you hire a house inspector, be sure to check the main parts of the house like structure, roof, plumbing systems and electrical systems. If it’s an older property, you’ll want to be sure that everything is in working order before you end up living there permanently.
Sell it quickly
If you have any debts or expenses you need to cover as a priority before considering the inherited property, you may find it easier to sell the property quickly to a cash buyer. Your Trusted Home Buyer is a real estate investor who works with direct real estate sales and can offer you cash quickly for your home.
We buy houses and process them as quickly as possible while helping homeowners receive a fair cash offer based on research from your house and recent sales in your neighborhood. No need to worry about red tape with a sale – after we’ve researched your home we’ll present you with a no-obligation offer within at least 24 hours!
We can also close with a reputable and local title company on the day you choose, to give you freedom with your sale. If you want to know more, check out our website, blog and FAQ section for plenty of information on our services!
Tax Payments on an Inherited Home
There are two main tax considerations for your newly inherited home known as estate taxes and capital gains taxes. It’s important to familiarize yourself with them even if you aren’t planning on selling the property as it may come up in the future. It’s always better to be prepared than to learn things at the last minute.
As of 2021, estates which are valued at $11.70 million or over ONLY are subject to federal estate taxes. These taxes are assessed only on the value of the estate or if the inheritances exceed the threshold amount.
Regardless of the value of the estate or inheritance, surviving spouses are generally exempt from these taxes, meaning if you have inherited your partner’s home then you likely won’t have to pay this tax. In addition, taxpayers who own estates above the threshold can set up trusts that will facilitate the transfer of wealth, in order to minimize estate taxes overall.
Capital gains Taxes
In the event that you decide to sell the home, your profits may be subject to capital gains tax. This is a tax on the growth in value of investments which can happen when an individual (or corporation) sells those investments, much like selling property.
It’s important to remember that this tax is only paid on ‘realized’ gains (also referred to as capital gains) after the property is sold, which means you won’t have to worry about paying tax until you finalize the sale of the property. The amount you will be taxed depends on your finalized sale price so you should take the time to research the tax rates in preparation for your sale.
The stepped up basis of capital gains tax lets families leave certain assets to their heirs without having to pay capital gains tax. Currently, tax law states that when someone dies, the basis is stepped up at death to the fair market value as of the date of the death. A good example would be if an individual bought a home for $2 million, and at time of death, the property was valued at $6 million; this means that the heir of this property would not have to pay capital gains tax if they sold the property for its current value.
There are multiple things to consider when you inherit a home, but thankfully in this instance, the mortgage is not one of them. Once you’ve worked out a solution with any fellow heirs, you can either get started with selling the home to cover your own mortgage, or even move in if you prefer it over your own home!
For any questions regarding selling the property quickly, simply contact us to find out more – we can’t wait to hear from you!